Six of the big mortgage companies involved the Hope NOW Alliance announced that the Alliance is expanding its efforts to help homeowners facing foreclosure.

The rate freeze program announced by President Bush in December applied only to borrowers who were facing resets on subprime adjustable rate mortgages but who were current, in fact had never been delinquent, on their mortgage payments.

The new program dubbed Project Lifeline extends earlier Hope NOW efforts to include those who are seriously delinquent whether their problems are with subprime, Alt A or prime loans and will even assist those in foreclosure with second mortgages or home equity lines.

The new program was announced in a press conference Tuesday morning at the Treasury Department. Treasury Secretary and Department of Housing and Urban Development Secretary Alphonse Jackson along with Bank of America representative Floyd Robinson and Home Now Alliance Executive Director Faith Schwartz presided.

Lifeline will be, at least at first, a joint effort by six of the largest mortgage servicers in the country; Bank of America, Wells Fargo, Citigroup, Washington Mutual, J.P. Morgan Chase, and Countrywide Mortgage. These six represent 50 percent of the U.S. mortgage market. There are another 19 services that are members of Hope NOW and Secretary Paulson expressed a strong desire to have them sign on to the new program.

Borrowers who appear to qualify for help will receive letters from their mortgage servicers notifying them of the program and their possible eligibility. These borrowers, who will be at least 90 days behind in payments, must contact the servicer within 10 days of receiving the letter and inform the servicers that they are interested in the program, that they are willing to participate in counseling if required, and they must provide financial information to the servicer. If the loan appears salvageable, the homeowner will be granted a 30 day "pause" in the foreclosure process to allow time for a loan modification or other resolution.

Bank of America's Robinson said that the evaluation of a borrower's situation will address the entire picture including credit card and other debt and will be transparent so the borrower knows exactly what is happening with the foreclosure and his loan.

Robinson and Schwartz recapped some of the activities of Hope NOW since it was set up to facilitate contact between troubled homeowners and those who might help them.

The hotline is now handling over 4,000 calls a day, up from 625 at its start, and there are 400 housing counselors working for Hope NOW. The organization has sent out 775,000 letters to borrowers in the last three months and has a 16 percent contact rate but hopes that this will improve as the program receives more publicity. An additional 200,000 letters are going out each month. 870,000 borrowers have been helped with their foreclosure situation and over one-half million of these have been subprime borrowers. Loan modifications doubled in the fourth quarter of 2007 over the third quarter.

One reporter asked how borrowers who are "upside down" in their loans would be treated. Would Bank of America for example, be open to writing down a loan to reflect the current market value of the home, thus forgiving that amount of debt? Robinson said he could not speak for the other servicers but that Bank of America would look at this kind of solution on a borrower-by-borrower basis.

Another reporter asked how many borrowers Project Lifeline was expected to help but Secretary Paulson refused to speculate saying that it would be up to the individual servicers to determine that number but that there would soon be a reporting system in place so that these kinds of questions can be answered.

Paulson stressed that not all borrowers can be helped by Project Lifeline or any other program. There will be some who simply refuse to make contact or who walk away from their homes and those whose financial situation makes it impossible to keep their homes "and we cannot help those who refuse to honor their obligations. But Project Lifeline has the potential to offer new solutions to responsible, able homeowners who want to keep their homes."